Chainlink v/s Ethereum: Who takes the crown?

Since Chainlink was developed on Ethereum, people often don’t get the difference between the two. Both Chainlink and Ethereum are popular cryptocurrencies based on blockchain technology. Still, they have certain technological differences, strengths and weaknesses, use cases, adoption, community support, market performance, and prospects.

So can Chainlink surpass Ethereum? Can Chainlink be replaced by the blockchain network it is built on? Let’s find out in the section below.

What is Chainlink?

Chainlink has been actively operating in the market since its launch in 2017, previously known as SmartContract.com. The name was changed to align with the new goals, and an ICO was launched that secured $32 million. Chainlink heavily differs from Ethereum and other competitors in various ways.

For instance, Chainlink is a decentralized oracle network that off-chain sensors are crucial for operating decentralized applications or dApps. Oracles transfer data to blockchains and often monitor crypto prices for decentralized exchanges (DEXs) or dApps. 

What is Ethereum?

Ethereum is the most popular blockchain in the world after Bitcoin, a network that made a brand name after entering the crypto market in 2015. Ethereum ushered in updating blockchain capabilities through the introduction of smart contracts. The strategy brought about a new digital era where dApps became the primary objective of several networks.

Ethereum supports ETH or the Ether crypto. The decentralized infrastructure’s early entry allowed it to become a juggernaut today. The blockchain dominates the crypto market as one of the most popular dApp and DeFi protocols.

Chainlink v/s Ethereum

1. Technological Differences

Chainlink differs from Ethereum technologically as it aims to connect real-world data with smart contracts. It is made possible by using a network of nodes that offer data to smart contracts and allow them to carry out on-chain actions based on events taking place around the world. Chainlink uses a unique consensus algorithm known as the LINK token that ensures the security and reliability of the blockchain-decentralized Oracle network.

On the other hand, Ethereum is a decentralized platform used to build decentralized applications and smart contracts. Ethereum uses Solidity, a Turing programming language that allows software developers to create complex applications to execute smart contracts on Ethereum. The blockchain network has its native crypto, ETH or Ether, used as a mode of payment to execute smart contracts on Ethereum.

2. Strengths and Weaknesses

Both Chainlink and Ethereum have their own set of strengths, weaknesses, and challenges. When it comes to crypto like Chainlink and Ethereum, security becomes an integral consideration. Chainlink uses various security measures to protect client funds and provide a reliable network. Some standard security measures used by Chainlink include two-factor authentication, secure socket layer or SSL encryption, cold storage, and many more.

Ethereum also employs the above security measures. However, it also uses a consensus algorithm, Proof-of-Work or PoW, designed to prevent hacking and fraud attempts on the blockchain network. 

Apart from security, both Chainlink and Ethereum face another significant challenge: scalability. Chainlink has introduced a variety of scaling solutions that include sharding, state channels, and off-chain computation. These solutions increase the efficiency and capacity of the network and enable more transactions per second.

However, Ethereum is facing substantial scalability challenges as high transaction fees and network congestion have become major issues on the Ethereum network. Nevertheless, the Ethereum community is working on various scaling solutions, including Plasma, state channels, and sharding, to improve the network’s efficiency and scalability.

3. Use Cases and Adoption

Chainlink is used to create decentralized finance or DeFi applications, including decentralized exchanges, automated market makers, and prediction markets. It provides accurate and reliable real-world data to Chainlink smart contracts. DeFi apps can execute on-chain actions depending on real-world events like price movements in financial markets.

On the other hand, Ethereum is being adopted for various use cases that go beyond decentralized finance applications. Ethereum is employed for creating more advanced dApps, including identity verification, voting, supply chain management, gaming, and many more. It also serves as a blockchain platform to launch ICO (Initial Coin Offering) and create some of the most potential and successful ICOs in the crypto market.

4. Market Performance and Trends

Chainlink was launched in 2017 with the lowest price of $0.141 in Sept 2017 and the highest price of $50.07 in May 2021. 

Based on the historical price movements, Chainlink Prediction for 2024 is estimated at $16.82 and may reach a yearly high of $19.85. Based on our LINK price prediction, the price of Chainlink may reach a maximum of $37.57 by 2027. In addition, the price forecasted for Chainlink is expected to gain 900% in the next six months and reach $73.10 by 2030.

Ethereum was launched in 2015 and gained a market cap of 1 million USD by 2016. After the division of Ethereum into Ethereum and Ethereum Classic, the coin reached a value of $376.36, 121.4% more than its initial value. 

Based on historical price movements, ETH price prediction for 2024 is estimated at about $3,541 and may reach a yearly high of $5,097. Based on algorithmically generated predictions, the price of Ethereum may reach $6,564 by 2025. In addition, the price forecast for Ethereum is expected to gain significantly and reach $11,142 by 2027.

5. Community Support and Development

While comparing cryptocurrencies, community support is an essential consideration. Chainlink has an ever-expanding community of users and developers who have shown great interest in the technology and LINK’s potential to revolutionize the digital industry. Chainlink has received positive feedback for introducing the most innovative approach to linking smart contracts with real-world events. 

Ethereum has one of the most active and largest communities in the crypto industry, as the platform has existed in the market for many years with a large population of users and developers using and building decentralized applications on the ETH network. Ethereum crypto also has a strong ecosystem of developers with various resources and tools.

6. Future Prospects and Evolution

As independent cryptocurrencies, both Chainlink and Ethereum have completely different objectives in the cryptocurrency space. While Chainlink uses Oracle networks to transfer secure tamperproof data, Ethereum is a smart contract token. Chainlink is built on the Ethereum blockchain and generally follows ETH’s performance.

Although Chainlink heavily relies on Ethereum, the two tokens have operated independently and performed outstandingly even during a bullish market. Ethereum certainly has a higher market capitalization than Chainlink, as it supports more decentralized applications and possesses more utility.

However, since Ethereum has achieved tremendous value and Chainlink is built on Ethereum, LINK also has great growth potential.

Conclusion: Is Chainlink Better than Ethereum?

Chainlink continues to serve an integral niche that can improve the efficiency and performance of all other networks. In comparison, Ethereum has improved its strategy and keeps fighting other potential competitors to be an innovative and efficient force in today’s crypto market.

As such, Chainlink and Ethereum protocols are working together to enhance the entire crypto market, and both are profitable to trade and invest in for the long term.